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June 10, 2016, Appellate Court Digests
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Kansas Supreme Court – Attorney Discipline

Original Proceeding in Discipline
In the Matter of Benjamin N. Casad
60 day suspension, stayed upon conditions
No. 114,542 – June 10, 2016

FACTS: A complaint was filed in June 2015 charging Casad with violating KRPC 1.1 (competence), 1.3 (diligence), 1.4(a) (communication), and 8.4(d) (engaging in conduct prejudicial to the administration of justice). The complaints arose after Casad was appointed to represent an elderly man in a criminal appeal. The State conceded that there were speedy trial issues that warranted a reversal of the client's convictions. After submitting his appellate brief, Casad was notified by the court that he failed to comply with Supreme Court Rule 6.02(a)(4) by adequately citing to the record on appeal. Casad was ordered to submit a corrected brief with adequate citations. Casad failed to comply, and the appeal was dismissed for failure to brief. Casad never informed his client of these events. Trial counsel learned of the dismissal and contacted Casad, who told him that he planned to file a motion that would remedy the dismissal. Casad eventually filed a motion to recall the mandate, which was denied.

Hearing Panel: A hearing panel of the Kansas Board for Discipline of Attorneys conducted a hearing to consider the petition. The panel considered the relative lack of aggravating factors and the presence of mitigating factors including depression and anxiety and noted that Casad self-reported the misconduct and cooperated with the disciplinary process. The panel recommended published censure and also believed that Casad should be ordered to comply with terms of a KALAP monitoring agreement.

HELD: The evidence before the hearing panel clearly and convincingly established that the charged misconduct violated the KRPC. The court believed that the conditions suggested by the hearing panel were appropriate. But due to the nature of the misconduct, the court imposed a 60 day suspension of Casad's license. The suspension is stayed upon Casad agreeing to certain conditions. A minority of the court would tie the conditions of the stay to the period of time that Casad is working with KALAP.

Kansas Supreme Court – Attorney Discipline

Original Proceeding in Discipline
In the Matter of Kerry Dale Holyoak
Indefinite suspension
No. 114,836 – June 10, 2016

FACTS: Disciplinary Administrator filed formal complaint against Holyoak on March 23, 2015. The alleged violations stem in part from Holyoak registering his nonlawyer wife as owner of the law practice formed as a limited liability company - a violation Holyoak voluntarily resolved - and by the law firm’s website misleading reference to mediation services the wife provides. Next, in regards to the attempt by Wilson County Holdings (WCH) to secure mineral rights within City of Fredonia, Holyoak: (a) drafted a covenant not to sue that falsely claimed he represented 50 other landowners; (b) offered to destroy evidence that could be used by potential litigants against WCH; and (c) directed WCH to pay funds to Holyoak in an offshore account as a form of “asset protection.”

Hearing Panel: With Holyoak present and represented by counsel, the hearing panel determined Holyoak violated KRPC 5.4(d)(professional independence of a lawyer, relating to ownership of the law office); 7.1(a) (communications concerning a lawyer’s services, relating to law practice website); 8.4(c) (engaging in conduct involving misrepresentation); and 8.4(g) (engaging in conduct adversely reflecting on lawyer’s fitness to practice law). Six month suspension recommended.

HELD: Hearing panel’s conclusions are adopted, but a greater sanction than 6 month suspension is appropriate where Holyoak: (a) engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation; (b) engaged in multiple acts of conduct that adversely reflect on his fitness to practice law; and (c) attempted to avoid paying taxes on money he hoped to get from WCH. Holyoak refused to acknowledge wrongful nature of his conduct as pertaining to the covenant not to sue, which ultimately evolved into a scheme of bribery and extortion. Indefinite suspension ordered.

Kansas Supreme Court – Attorney Discipline

Original Proceeding in Discipline
In the Matter of Stephen M. Stark
Two year suspension suspended, two year probation imposed
No. 114,583 – June 10, 2016

FACTS: A complaint was filed in February 2015 charging Stark with violating KRPC 1.3 (diligence), 1.4(a) (communication), and 8.4(d) (engaging in conduct prejudicial to the administration of justice). The complaint arose after Stark worked with a municipality to review a contract to purchase property. It was agreed that Stark would file a motion for summary judgment as soon as possible, but Stark delayed the filing for several months, and the motion failed to raise several key issues. Stark also failed to provide his client with a copy of the motion and, more importantly, failed to include an affidavit that was listed as an exhibit to the motion for summary judgment. Stark told the district court that the affidavit existed, even though it did not. When the motion for summary judgment was denied, Stark never told his client or showed him a copy of the ruling. He also failed to communicate a settlement offer. Once all of this was discovered, the client obtained new counsel. Stark self-reported his misconduct to the Office of the Disciplinary Administrator.

Hearing Panel: A hearing panel of the Kansas Board for Discipline of Attorneys found that Stark committed various misconduct related to his lack of diligence and communication with his client. It also determined that Stark's mentions of a non-existent affidavit to both opposing counsel and the trial court were prejudicial to the administration of justice. Although there were aggravating factors, the panel noted Stark's lengthy history of depression and anxiety, as well as his cooperation with the disciplinary process, warranted that Stark be placed on probation with an underlying suspension of 2 years. Stark asked for probation, but believed the period of suspension should only be 90 days.

HELD: There was clear and convincing evidence of Stark's misconduct, and the panel's conclusions were adopted. A majority of the court accepted the Disciplinary Administrator's recommendation that Stark be suspended for 2 years with a 2 year term of probation. A minority of the court would have imposed a shorter term for the underlying suspension.

Kansas Supreme Court – Civil

Debtors and creditors; Secured transactions
Born v. Born
Sedgwick District Court – Reversed
Court of Appeals – Reversed and remanded
No. 108,963 – June 10, 2016

FACTS: Betty Born served as a trustee of the inter vivos, revocable trust created with her late husband, John. Betty brought this injunctive and declaratory judgment action against Sharon Born. Sharon held two installment promissory notes upon which Born Trust assets had been pledged as security. The notes were issued when the family business was restructured to allow John and a nephew to purchase a majority interest. John died before the first installment payment was due. When Betty attempted to make an annual payment on the note, Sharon refused to accept it. Sharon claimed that John's death constituted a default and, consequently, accelerated the payment schedule so that the entire balance of the note was immediately due and payable. But when Betty attempted to pay the entire balance, Sharon refused to accept it. She instead wanted to have all of the collateral turned over to her at once. Betty responded by filing a declaratory judgment action claiming that Sharon breached the terms of the notes and violated provisions of the UCC. The district court found in Sharon's favor, and the Court of Appeals affirmed that finding. The Kansas Supreme Court granted Betty's petition for review.

ISSUE: Whether Sharon's strict foreclosure was allowable under both the terms of the trust and the UCC

HELD: It is clear that the UCC applies to these transactions. Article 9 of the UCC provides a secured party with several remedy options. When considering strict foreclosure, it is allowable only if the debtor consents. Betty did not consent to the strict foreclosure, and in fact timely notified Sharon that she objected. The Court of Appeals was concerned that disallowing strict foreclosure left Sharon without a remedy. But the notes contained a severability provision that could have been used to remove any term that was unreasonable. Regardless, the notes gave Sharon remedies other than strict foreclosure. And she was not entitled to both accelerate the balance due while at the same time demanding the collateral. The case is remanded to the district court for a determination as to the balance due on the outstanding note.

STATUTES: K.S.A. 2013 Supp. 84-1-201(b)(35); 84-9-109(a)(1), -601(a), -601(c), -602, -603(a), -620, -622, -623; 84-2-302(1); K.S.A. 84-3-603(c)

Kansas Supreme Court – Civil

Partition; Standards of review; Written instruments
In re Estate of Einsel
Comanche District Court – Reversed and remanded
Court of Appeals – Affirmed
No. 109,367 – June 10, 2016

FACTS: Carol Einsel filed a petition for partition in district court, naming her ex-husband Rodney as defendant. The disputed ownership interest involved the Einsel family ranch. In the petition, Carol claimed that she had an ownership interest in both surface rights and mineral interests on ranch property. She requested an order which clarified all parties' ownership interests, directed partition, and awarded payment of oil and gas proceeds. Rodney responded by arguing that the divorce decree might have given Carol 40% of his remainder interest in an inheritance, but there was no real property interest involved in that inheritance. At the partition court, the dispute centered on whether the divorce decree gave Carol an interest in a money judgment or an interest in real property. The partition court agreed with Rodney that Carol was given only a monetary judgment. The Court of Appeals overturned that decision, reading the divorce decree to give Carol an interest in real property. Rodney filed a petition for review, which was granted.

ISSUES: (1) What standard of review governs this appeal, (2) whether the divorce court awarded Carol a monetary judgment or an interest in real property, (3) what instructions should be given for a remand

HELD: Although a district court has broad powers in partition proceedings, those powers are not absolute or beyond appellate review, and an abuse of discretion standard is appropriate. In this case, the outcome is controlled by the interpretation of the divorce decree. The interpretation of a journal entry presents a legal question over which the court exercises de novo review. Because this case turns on the journal entry's meaning, the review of this case is governed by a de novo standard. The plain language of the divorce decree was sufficient to discern that court's intent. That instrument, read in its entirety, clearly shows that the divorce court meant to give Carol an interest in real property. While Carol's interest in real property is clear, the extent of that interest is less clear. Therefore, on remand, the partition court should determine the exact nature of Rodney's property interest and Carol's corresponding ownership in that property.

STATUTE: K.S.A. 60-1003(c), -1003(d), -2101(b), -2106(c)

Kansas Supreme Court – Civil

Administrative law; Taxation
In re Equalization Appeal of Wagner
Court of Tax Appeals – Reversed
Court of Appeals – Reversed
No. 109,783 – June 10, 2016

FACTS: Kristin Wagner appeals the Court of Appeals' decision affirming the Court of Tax Appeals' (COTA) $494,200 valuation of her home for the 2012 tax year. Wagner had previously waged a successful dispute of the 2011 valuation of her home, which resulted in it being assigned a 4.00 "good" quality rating rather than a 4.33 "good+" rating. Because the 2012 value of Wagner's home was found to be 2.94% lower than the 2011 value, Wagner believed her home should be valued at $479,600. COTA disagreed with Wagner and set the 2012 value of her home the same as 2011's final appraised value, finding that the final appraisal for the 2011 tax year constituted the best evidence of the home's 2012 value. The Court of Appeals agreed with COTA, and the Kansas Supreme Court granted Wagner's petition for review.

ISSUE: Whether the county was allowed to decrease the appraisal of Wagner's property from 2011 to 2012

HELD: Principles of res judicata and collateral estoppel do not apply when different tax years are being disputed, since taxes are levied annually. As long as the county can meet its burden of proof, it can change the quality rating or value of a home from tax year to tax year. But in this case, the county conceded that the value of Wagner's home was capped at $494,200 – the final value for 2011. The uncontested appraisals for 2012 showed that Wagner's home suffered a 2.94% decrease in value between 2011 and 2012. Under that standard, Wagner's calculation was correct and her home should be valued at $479,600 for the 2012 tax year.

CONCURRENCE (Johnson, J.): Concurs in the result.

STATUTE: K.S.A. 2012 Supp. 74-2426(c), 77-621(a)(1), -621(c), -6219d), 79-1460, -1609

Kansas Supreme Court – Civil

Eminent domain; Jurisdiction; Written instruments
Water District No. 1 of Johnson County v. Prairie Center Development, L.L.C.
Johnson District Court – Affirmed
No. 112,973 – June 10, 2016

FACTS: Water District No. 1 (WaterOne) filed an eminent domain petition in district court seeking to condemn 10 tracts of land, subject to existing easements. All of the tracts were owned in fee simple by Prairie Center Development, L.L.C. (Prairie Center). After the district court granted the petition, D.P. and Wanda Bonham and their trust (the Bonhams) – who were not parties to the condemnation proceeding – filed both an appeal of the condemnation order and a motion to void that order. The Bonhams owned an easement in one of the condemned tracts and they argued that WaterOne took their easement without complying with the Eminent Domain Procedure Act (EDPA), specifically by failing to name them in the condemnation petition or send them notice. The district court denied the motion to void and that decision was appealed.

ISSUES: (1) Whether the district court had jurisdiction to consider the Bonhams' arguments, (2) whether WaterOne violated the Bonhams' rights during the eminent domain process

HELD: The EDPA is the only avenue through which government can exercise its eminent domain power. There is nothing in the record which suggests that WaterOne failed to fully comply with the EDPA as to Prairie Center, the owner of the subject property, and Prairie Center did not appeal any aspect of the condemnation. The condemnation petition noted that all takings were subject to existing easements, which would include the Bonhams' easement. Although the Bonhams were not named in the petition, the district court correctly addressed the narrow issue of whether WaterOne's petition contained a statutory defect by failing to name the Bonhams. And the district court correctly determined that WaterOne's petition was not statutorily defective, primarily because the petition clearly noted that there was no attempt to take the Bonhams' existing easement. Because there was no attempt to take the easement, the Bonhams did not need to be named in the petition.

CONCURRENCE (Stegall, J.): Justice Stegall agreed with the conclusion that WaterOne did not condemn the Bonhams' interest and so was not required to send them notice of the condemnation proceedings or name them in the petition. He believes, however, that the EDPA is drafted in such a way as to allow condemning authorities to employ "drafting gamesmanship" to avoid giving notice to landowners.

STATUTES: K.S.A. 2015 Supp. 26-501(b), -501(c)(2), -502, -503, -504, -505, -506, -507, -508(a), 60-224(b)(1)(B), -261; K.S.A. 26-502, -513(a)